2016 will be year of contrasting fortunes for different manufacturing sectors, group says

14:43 28 December 2015

File photo dated 16/03/07 of an oil rig in the North Sea as confidence levels among oil and gas contractors working in the North Sea have hit an all-time low, with a large majority believing job losses will continue over the next year, an industry report has found. PRESS ASSOCIATION Photo. Issue date: Thursday November 26, 2015. Four in five contractors surveyed say they are less confident in their prospects than they were a year ago, compared to just 1% who were more confident. See PA story INDUSTRY Oil. Photo credit should read: Danny Lawson/PA Wire

Motor vehicles, aerospace and the rejuvenation of pharmaceuticals provide considerable reasons for optimism next year, according to a leading business group.

EEF forecasts the sectors will drive growth in 2016 and buck the wider manufacturing trend of reduced employment, with an increase in jobs.

In contrast, the collapse in oil and gas activity, weakness in key export markets and strong sterling are providing “considerable challenges” for other sectors.

Factors that have dragged on manufacturing activity in 2015, including disappointing construction activity, should be a less prominent issue for exposed sectors in the next 12 months, the manufacturers’ group predicted.

EEF chief economist Lee Hopley said: “Manufacturing is a hugely diverse part of the UK economy. Looking at the sector as a whole, growth has disappointed in 2015 and we’ve seen overall confidence levels tail off through the year.

“But to get a true sense of where the sector stands going into 2016 we have to look at the variation in performance across different industry segments, with some sectors enjoying a positive momentum, while others have been hit hard by global factors largely outside of both their and UK Government control.

“Looking forward, this divergence in performance shows no signs of abating, though most manufacturing sectors should see positive growth next year, albeit at varying levels.”